Penalties for RTI are comingNext April heralds the start of the new payroll regime RTI (Real Time Information). From then you must use this system to report your payroll to HMRC in real time, in other words, as it happens. So this is the last tax year that the taxman has to wait until mid May of the following tax year to know what you have paid your employees and whether you have paid the correct Pay As You Earn (PAYE)over to them.

RTI means that HM Revenue & Customs (HMRC) will immediately know what PAYE payments they are expecting from you, and as payments of said PAYE are due by the 22nd of the following month (if paid electronically), they will also be able to fine your business for late payment. Even payments a day late will be subject to a fine.

Tough penalties are expected.

However one area where penalties will not immediately be imposed are for late submission of your payroll data reports, called Full Payment Submissions. After a consultation process in the current year HMRC have decided that there will be no penalties for late notification in the first year of RTI to allow employers to get to grips with the new system. However, they will still be issuing penalties for PAYE errors in line with the current rules:

HMRC calculates penalties for inaccuracies as a percentage of the additional tax and National Insurance due.
The penalty rates for inaccuracies can be:

  • Up to 30% of the potential lost tax etc. if the inaccuracy is careless
  • Up to 70% of the potential lost tax etc. if the inaccuracy is deliberate
  • Up to 100% of the potential tax etc. if the inaccuracy is deliberate and the person attempts to conceal it.

There is no penalty if you can show you have taken reasonable care to report the correct tax etc.

RTI is coming and with it a whole new tough regime for employers. If you have not yet taken action on your payroll then you need to do it now.

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